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John GobsonEconomist
Country:
 Great Britain |
Content:
Biography of John Hobson
John Hobson was an economist known for his dissenting views and his opposition to mainstream economic thought. Despite facing rejection in several places for academic positions, Hobson established himself as an economic heretic, challenging orthodox economic views in his writings. He was born in Derby in 1858 and passed away in Hampstead in 1940. Hobson studied at Derby School and Lincoln College, Oxford, where he earned his bachelor's degree in 1880-81. However, he received a third-class degree. He later pursued classical literature studies in Faversham and Exeter before moving to London.
In addition to his private income from his father's newspaper in Derby, Hobson began earning money through journalism, lecturing, and writing books. Despite his aspirations to become an economics professor, his views were considered too heretical by Professor F. Edgeworth, and he was never offered an academic position in English universities or the opportunity to publish in the Economic Journal. As a result, he remained a publicist, propagating his ideas through his books and various liberal and socialist publications.
Hobson's reputation is colored by his presumed role as a precursor to Lenin's theory of imperialism and Keynes' concept of effective demand. Although neither connection is substantiated, they have contributed to distorting Hobson's intellectual image. However, his contributions to economic theory provide a unique and internally consistent understanding of the boundaries and nature of economic theory.
Theory of Underconsumption
For a long time, Hobson was known as a representative of the theory of underconsumption. His first book, "The Physiology of Industry" (1889), co-authored with A.F. Mummery, aimed to identify the flaws in classical political economy as presented by J.S. Mill. The main idea of the book was that trade depressions occur due to insufficient effective demand, limiting profitable production. Hobson argued that there is a limit to the amount of useful savings that society can make, resulting in underconsumption or excess savings.
Hobson's disagreement with marginalism, based on its unrealistic process of abstraction, deepened the rift with the Marshallian tradition. He continued his critique in subsequent books, such as "The Evolution of Modern Capitalism" (1894) and "The Problem of the Unemployed" (1896), where he challenged neoclassical analysis on a wider range of issues.
Theory of Distribution
Hobson also developed a theory of distribution in his book, "Economics of Distribution" (1900). He distinguished between the costs associated with maintaining any factor of production and its rent element. He argued that it is possible to add surplus value to land, labor, or capital. He introduced the concept of forced incomes as the claims made by the more powerful side in negotiation, resulting in unearned income for individuals and classes. Hobson suggested that the share of income considered economically non-functional changes in direct proportion to the absolute level of income. Consequently, progressive taxation would not diminish the natural incentive for production.
Imperialism Theory
Hobson's theory of imperialism, developed in response to the Anglo-Boer War (1892-1902), was based on analyzing the reasons behind Britain's annexation of the two South African republics. He argued that influential circles controlling gold mines and the press, particularly foreign Jews, threatened national interests due to their cosmopolitan nature. Hobson viewed speculative investments in undeveloped territories as the cause of imperialism, driven by a parasitic class at home. He believed that imperialism arose from underconsumption, suggesting that excess savings were the economic root of imperialism.
Hobson's theory of imperialism diverged from Lenin's view that imperialism was a structural necessity of the metropolis economy. He advocated for redistributive taxation to counter excessive savings and stimulate domestic demand. He believed that Britain could easily make up for any loss in foreign trade by creating wealth domestically, which argued for protectionism, a view he downplayed in line with the prevailing sentiment at the time.
Hobson's economic ideas gained prominence during the Great Depression after World War I. His views on excessive savings found more sympathetic reception, even among professional economists who previously held the assumption of full employment. He developed warm relations with J.M. Keynes, who acknowledged Hobson's contribution in his General Theory.
In conclusion, John Hobson was an economist who challenged mainstream economic theories and provided alternative perspectives on underconsumption, distribution, and imperialism. Despite facing rejection in academia, Hobson left a significant intellectual legacy through his writings and contributed to the development of economic thought.
